Purchasing REO Properties
July 7th, 2008 categories: Home Buyers, Prescott Real Estate Trends
Are you considering buying a REO or bank owned property? Given the current home buying market, many home buyers see this a wonderful opportunity to buy a home for considerably less than market value. This may be true, but it’s important to know the process and understand the paperwork. If you plan on purchasing a bank owned property, read the fine print. There are some contractual differences compared to the standard A.A.R Real Estate Purchase Contract.
Use your Negotiating Power. If the listing is new on the market, the bank may not be willing to deviate from the list price. Look for REO homes that have been on the market for 30 days or more.
Check fees charged by the Title/Escrow company. Banks negotiate bulk rate contracts with Escrow companies. If you decide to use the banks Title/Escrow company they may charge more in order to make up for the discount they are offering the bank.
Banks do not pay for any extras. Banks generally are not willing to pay transfer fees, delinquent home owners association fees, any property inspections or home warranties. Be prepared to pay for these items out of your pocket.
Verbal Agreements. Most banks like to negotiate verbally before putting anything in writing. Generally, this is the number one rule on not what to do, but the bank hold the cards and sets the rules.
Expect the bank to use their own purchase contract or at the very least addendum’s to standard purchase contracts. Many times these contracts are not in the favor of the buyer. Read through everything thoroughly and if you don’t understand something, consult professional advise.
“As Is”. Most banks sell homes in “as is” condition. Make sure your offer contingent upon inspections, and your approval of those inspections.
Patience is a virtue! Most banks take days if not weeks to respond to offers. Be patient. If your offer is rejected, wait 30 days and re-submit the offer.
Have your loan in order and ready to go. Have a pre-approval letter from your lender ready to submit to the bank. Be certain your lender can close escrow on the pre determined closing date. If you run into delays and need more time to close, the bank may charge you for each late day.
